Court Agrees To Consider Patent Case On Royalties

By THE ASSOCIATED PRESS

Published: September 26, 2007

The Supreme Court said on Tuesday that it would consider a technology patent case that could have far-reaching ramifications for computer makers and other industries with global supply chains.

The case was brought by a group of computer makers from Taiwan. They have accused a South Korean rival of using its patents in an effort to ''shake down the entire computer industry for several billion dollars in duplicative licensing fees.''

At issue is whether a patent holder can seek royalties from multiple companies as a patented product works its way through the manufacturing process.

The Taiwan companies, led by Quanta Computer, are asking the justices to overturn a 2006 ruling by the United States Court of Appeals for the Federal Circuit, which they say would open the door for patent holders to do just that.

Quanta and the other companies manufacture computers under contract for United States companies like Hewlett-Packard, Gateway and Dell.

The three American corporations filed court papers in support of Quanta.

LG Electronics, based in South Korea, sued the Taiwan companies in 2000, claiming they infringed several patents LG holds on computer chip technology.

LG had entered into a broad patent licensing agreement with Intel, which then sold chips with LG's technology to Quanta and other computer manufacturers. LG argues that Intel's license did not extend to the computer makers.

Once Quanta combined the chips with non-Intel components and installed them into computers, they infringed five of LG's patents, the Korean company said in court papers.

The justices have recently shown a high degree of interest in patent law and ruled on several prominent patent cases in the last term. In those cases, the court overturned the federal circuit's rulings and reined in what many legal experts say are excessive patent protections.